Offer and Acceptance

Question 1

What is the difference between an offer and acceptance?

Answer 1

An invitation to treat is simply an advert.

Question 2

The person who makes the offer is the offeror, and the person to whom the offer is made is the offeree. True or false?

Answer 2

True

Question 3

What is the difference between a bilateral offer and a unilateral offer?

Answer 3

Bilateral - an offer by one person in exchange for an offer or promise by another person.
Unilateral - a promise by one person in exchange for an act by another person

Question 4

In respect of which type of offer is the offeree not required to communicate his acceptance of the offer?

Answer 4

Unilateral offer

Question 5

What is the mirror-image rule in the context of offer and acceptance?

Answer 5

Acceptance of an offer must be unconditional and it must correspond to the exact terms of the offer

Question 6

What is the objective test?

Answer 6

The test used by the courts to determine whether an agreement has been formed. The courts analyse the interaction between the parties from the point of view of a reasonable person.

Question 7

What are 5 examples of invitations to treat?

Answer 7

1. advertisements
2. display of goods
3. websites
4. auction sales
5. tenders

Question 8

When is an advertisement an offer?

Answer 8

When it is a unilateral advertisement.

Question 9

What is an unilateral advertisement?

Answer 9

Where an offeror makes a promise in exchange for the offeree performing an act, as an example, a promise of a reward for the person who finds a lost cat. When the action is completed, acceptance has been made.

Question 10

When is an auction an offer?

Answer 10

Auctions without reserve

Question 11

What is an auction without reserve?

Answer 11

They promise to sell the goods to the highest bidder. It is a unilateral offer, and the specific act is being the highest bidder.

Question 12

Does a counter-offer destroy an offer?

Answer 12

Yes.

Question 13

Maria offers a car for sale to Pavol for £1,000. In response, Pavol says to Maria, ‘The car is not worth f1,000, but I will give you £800 for it’. The next day, Pavol changes his mind and tells Maria that he accepts her offer and will buy the car for £1,000.

Has a legally binding contract been formed between Maria and Pavol?

Answer 13

The answer is no. Pavol’s response to Maria that he would give her €800 for the car is a counter-offer that destroyed Maria’s offer so that it is no longer open for Pavol to accept.

Question 14

Is a request for flexibility in payment terms (e.g. pay £50 everyone month for 5 months) a counter-offer?

Answer 14

No, and it does not destroy the offer

Question 15

When parties send their own standard terms of business to each other, which terms of business apply?

Answer 15

The last set of terms of business sent by one party to the other party before the other party starts to perform his obligations will apply to the contract

Question 16

What is the receipt rule?

Answer 16

An offeror must actually receive an acceptance for the acceptance to be valid.

Question 17

Can offer be accepted with silence?

Answer 17

No, there must be clear acceptance communicated (either verbally or by conduct)

Question 18

What is the postal acceptance rule?

Answer 18

Provides that the offeree’s acceptance is effective to form a legally binding contract as soon as the acceptance is posted. Even if the offeror does not receive the acceptance, he is still bound by the contract

Question 19

The postal acceptance rule apply to couriers?

Answer 19

No, only via royal mail post box or post office

Question 20

If an acceptance is sent via instantaneous media during office hours, when is it deemed to be received?

Answer 20

At the start of the next working day.

Question 21

BigBank sends an offer of a loan to Oneyema by post. BigBank tells Oneyema that if she wishes to accept the loan, the bank must receive her acceptance in writing by 5 PM on Friday. Oneyema decides to send her response in a letter to BigBank that she posts in a Royal Mail postbox before 5 PM on Friday

Has Oneyema’s response formed a legally binding contract with BigBank?

Answer 21

No, Oneyema has not formed a legally binding contract with BigBank. The words in the offer state that the bank must receive her acceptance in writing by 5 PM. This displaces the postal acceptance rule. This means that BigBank must actually receive
Oneyema’s acceptance by 5 PM on Friday for it to form a legally binding contract.

Question 22

How does an offeree accept a unilateral offer?

Answer 22

By conduct - this does not need to be communicated to the offeror.

Question 23

When can an offeror revoke an offer?

Answer 23

At any time before acceptance

Question 24

If an offeror has agreed with the offeree to keep an offer open for a specific time, can an offeror revoke the offer?

Answer 24

No before the specific time

Question 25

A goat escapes from the zoo. The zookeeper offers a reward of £100 in the local paper to the first person to return the goat to the zoo. A man does not see the notice, but finds the goat on his morning walk and takes the goat to the zoo. The zookeeper tells the man that he is
the first person to return the goat to the zoo and the zookeeper thanks the man with a chocolate bar. Later that day, the man’s colleague tells him about the notice for a reward in the newspaper.
Which one of the following statements most accurately describes the legal position of the parties?

A. The zookeeper is not obliged to pay the man the £100 reward because the man did not claim the reward when he returned the goat to the zoo.

B. The zookeeper is obliged to pay the man the £100 reward because the man accepted the zookeeper’s offer by exactly performing the specified actions.

C. The man can only claim the reward of €100 if he was aware of the advertisement when he brought the goat to the zoo.

D. By accepting the chocolate bar, the man accepted alternative performance by the zookeeper of the reward and is estopped from claiming the £100.

E. The man’s act of returning the goat amounts to acceptance of a unilateral offer so it is irrelevant whether or not he knew of the advertisement when he performed the act.

Answer 25

C. The man can only claim the reward of €100 if he was aware of the advertisement when he brought the goat to the zoo.

Question 26

A supplier is negotiating the sale of apples with a customer. The supplier writes an email to the customer on Friday morning to offer the customer 10 tons of apples for £2,000. The supplier says that she will start delivering apples as soon as the customer accepts the offer. The customer telephones the supplier to confirm that she accepts her offer. The telephone line is bad and the supplier cannot hear what the customer says and asks the customer to repeat her message. The customer repeats her message and then the telephone cuts out. The
supplier did not hear the message the first time or the second time.

Which of the following statements best describes the legal position in the case?

A. The customer’s acceptance has created a binding contract so the supplier must start delivering apples to the customer in accordance with the terms of their agreement.

B. The supplier is responsible for calling the customer back and checking what she said.

C. It is the customer’s responsibility to ensure that the supplier hears her acceptance.

D. Given that the customer has tried two times to tell the supplier that she accepts her offer, the supplier will be in breach of contract if she does not deliver the apples to the customer as soon as possible.

E. It was the supplier’s fault that she did not hear the customer’s acceptance of her offer so she must take the consequences of this.

Answer 26

C. It is the customer’s responsibility to ensure that the supplier hears her acceptance.

Question 27

A man sends a letter by Royal Mail to a colleague in which he offers to sell her his bicycle for £500 provided he hears back from her in two days. The colleague writes back saying that she will buy the bicycle for £400 and she posts her letter by Royal Mail within two days.

Which one of the following statements is the most accurate reflection of the legal position?

A. Provided the colleague put the correct address on the letter, the contract is formed when she posts it with Royal Mail.

B. The colleague’s letter amounts to a counter-offer that destroys the man’s offer.

C. The colleague’s letter is a unilateral offer that the man can accept by conduct.

D. Pursuant to the postal acceptance rule a contract between the colleague and the man is formed at the moment that the colleague posts the letter back to the man.

E. The colleague’s communication was an enquiry as to flexibility in payment terms so the man’s offer remains open for the colleague to accept.

Answer 27

B. The colleague’s letter amounts to a counter-offer that destroys the man’s offer.

Question 28

A lawyer is walking through the town centre when she meets her friend, a shopkeeper. The shopkeeper tells the lawyer that she rents her shop from an insurance company and that she is worried because the insurance company recently demanded 50% more rent each year.

In a panic, the shopkeeper sent a letter by post to the insurance company offering to pay 45% more per year, but after checking her finances, the shopkeeper has discovered that she cannot afford to pay 45% more per year.

Which of the following most accurately describes the legal position?

A. The lawyer (on behalf of the shopkeeper) should immediately telephone the insurance company to tell them that the shopkeeper has revoked her offer to pay a 45% increase. This will prevent the insurance company from accepting the shopkeeper’s offer to form a binding contract.

B. The shopkeeper should revoke her offer to the insurance company immediately by sending a letter by courier to the insurance company to ensure that it does not accept the shopkeeper’s offer of a 45% increase to form a binding contract.

C. The shopkeeper was bound by her offer to the insurance company from the moment she posted her letter.

D. The shopkeeper should revoke her offer to the insurance company by post because the postal acceptance rule provides that a message in a letter is effective from the moment it is posted in a Royal Mail postbox, regardless of whether or not the addressee receives it.

E. The shopkeeper should send a letter to the insurance company to investigate whether the insurance company would be prepared to accept a smaller increase in annual rent.

Answer 28

A. The lawyer (on behalf of the shopkeeper) should immediately telephone the insurance company to tell them that the shopkeeper has revoked her offer to pay a 45% increase. This will prevent the insurance company from accepting the shopkeeper’s offer to form a binding contract.

Question 29

On Monday, a man advertises his computer for sale in a trade magazine with the following words ‘LENOVO IdeaPad Flex 5 13.3’ for £200. I will sell to the first person who brings £200 to my office at 1 Oxford Street by 1 PM this Friday’. On Tuesday, the man changes his mind and decides to revoke his advertisement. The man cannot find the telephone number for the magazine so he places a notice in a national newspaper and the notice is published on Wednesday morning.

To which one of the following persons is the man obliged to sell his computer?

A. On Friday, a woman, having seen the advert on Monday, brings £200 to the man’s office at 11:00 AM.

B. On Friday, a student, having seen the advert on Monday, arrives at the man’s office at 10:15 AM and offers him £190 for the computer.

C. On Friday, a programmer, having seen the advert on Monday, arrives at the man’s office at 1:05 PM and asks whether he will accept £200 for the computer payable in four monthly instalments of £50.

D. On Friday, an accountant, having seen the advert on Monday, arrives at the man’s office at 11:30 AM with £200.

E. The man is not obliged to sell the computer to any person.

Answer 29

A. On Friday, a woman, having seen the advert on Monday, brings £200 to the man’s office at 11:00 AM.